Global Economy Continues to Influence Mortgage Rates
by Ed Ferrara
Thursday, June 07, 2012
As reports are released, whether it is Europe or China, the global economy continues to influence mortgage rates which are actually doing well in this environment. According to FreeRateUpdate.com's weekly survey of wholesale and direct lenders, low mortgage rates remained stable for the past week with conforming 30 year fixed mortgage rates at 3.375%, 15 year fixed mortgage rates at 2.750% and 5/1 adjustable mortgage rates at 2.125%.
These lowest mortgage rates are available with 0.7 to 1% origination fee for borrowers who have maintained good credit. According to S&P/Case-Shiller's report, home prices hit new lows in March. Consumers who wish to purchase a home are looking at the best period of time with record high affordability. Depending on the amount of shadow inventory, this scenario can change and go in any direction at any moment. With mortgage rates at record lows, it is also a time of opportunity for existing homeowners to refinance with either a traditional mortgage refinance or through HARP, the Home Affordable Refinance Program.
HARP is turning out to be an extremely successful program for many existing borrowers. While some are having problems getting a HARP approval, many consumers who request HARP refinance information online are finding success at an extremely fast pace. Online inquiries, which do not require a social security number, generally take minutes to receive a reply. This is the easiest, quickest and most successful way to access information regarding HARP.
Many higher income consumers are now using FHA mortgages since FHA increased the loan limit to $729,750 which depends on the location of the property. FHA mortgages have low down payment requirements and low mortgage rates which is turning out to be cost effective for purchasing high cost properties.
Current FHA 30 year fixed mortgage rates are at 3.125%, FHA 15 year fixed mortgage rates are at 2.625% and FHA 5/1 adjustable mortgage rates are at 2.625%. FHA continues to be a major choice for first time home buyers and offers these buyers several different mortgage programs and down payment options. Borrowers can use gifts from family, friends and employers, as well as, housing grants or loans to assist with meeting the down payment requirements.
It is well known that FHA loan closing costs (APR) are higher because of the upfront mortgage insurance premium and other FHA fees, but these expenses can also be added to the mortgage amount in most cases. Applications for FHA's streamline refinance with no cash out are already being submitted in preparation for the June 11th availability date when lower upfront and annual mortgage insurance premiums for this program will be introduced. This program is a wonderful opportunity for existing borrowers with FHA mortgages endorsed prior to June 1, 2009 to obtain the current low FHA mortgage rates.
Jumbo mortgage rates have been consistent this past week. Current jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 3.125% and jumbo 5/1 adjustable mortgage rates are at 2.250%. These are the lowest jumbo mortgage rates available with 0.7 to 1% to well qualified borrowers who can also meet lender's conditions. Jumbo mortgages require full documentation of employment, income and assets which will all be verified by the lender. Lenders may request additional information depending on the situation and lending guidelines. Since jumbo mortgages are private loans that are held by the lender, stricter rules are in place in order to reduce the lender's risk.
MBS prices (mortgage backed securities) were somewhat steady until Friday when a poor jobs report sent prices higher while stocks plunged. Although mortgage rates move in the opposite direction of MBS prices, average mortgage rates remained the same. Adding only 69,000 jobs in May, the unemployment rate increased to 8.2%. April's Personal Income report also fell short of expectations. ISM Manufacturing came in lower than expected while April Core PCE price index rose slightly. Bond markets remain strong as the uncertainty in Europe continues to rattle world markets with uncertainty. With the possibility of Greece leaving the Euro zone and the banking problems in Spain, the entire situation has investors worried about the outcome and how it will affect the U.S. and other economies.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.
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